Hudson’s Bay Lease Deal Sparks Legal Clash With Lender

Photo : The Canadian Press

Canada’s oldest retail brand, Hudson’s Bay, is facing a tough battle—not just to survive financially, but also with one of its biggest lenders. The conflict has gone to court, and now, both sides are blaming each other for what went wrong.

Hudson’s Bay is currently under creditor protection, which means the company is trying to fix its financial troubles while being watched by a court-appointed monitor. The retailer, once known for its large department stores across Canada, is now selling leases, closing stores, and trying to raise money to pay back debts.

But a major lender, Restore Capital, says the company is not handling things properly. Restore believes Hudson’s Bay is wasting money, making risky business deals, and should be placed under tighter control.

What Triggered the Dispute?

The trouble started after Hudson’s Bay filed for creditor protection in March 2025. Soon after, the company began closing stores and trying to sell store leases to raise money.

Restore Capital, one of the companies that loaned $151.4 million to Hudson’s Bay last December, is unhappy with the way the store closures and sales are being managed. Restore believes the company:

• Did not properly shut down stores

• Failed to sell off furniture and equipment at good prices

• Is pushing a risky deal to sell leases to Ruby Liu, a billionaire who owns malls

Because of these concerns, Restore wants the court to either give more control to the court-appointed monitor or appoint a new company as a receiver, which would allow lenders to take over Hudson’s Bay’s business decisions.

Who Is Ruby Liu and What Is the Deal About?

Ruby Liu is a B.C. billionaire and mall owner. She has a big plan: to open new department stores under her own name in the same spaces where Hudson’s Bay once operated.

Liu has already bought back leases to 3 store locations at her own malls for $6 million and has placed a $9.4 million deposit to buy 25 more leases across Ontario, Alberta, and B.C. The full value of this deal could be about $94 million.

Hudson’s Bay says this deal with Liu is their best option for raising money. They say they don’t have any better offers right now and believe the deal should move forward.

But not everyone agrees.

What Are the Concerns?

Restore Capital, some landlords, and other critics have concerns about the Liu deal. They say:

• Ruby Liu has not provided a clear business plan

• The deal is costing money in legal and rent fees

• If the deal fails, Hudson’s Bay may lose even more money

Restore has called the deal “illusory” and a “misadventure”, claiming it is putting lender money at risk.

Hudson’s Bay Responds Strongly

In a court affidavit, Michael Culhane, the CFO and COO of Hudson’s Bay, said the lender’s criticisms are “neither fair nor credible.” He says many of the problems Restore is pointing out were caused or worsened by Hilco, the company that owns Restore Capital and was in charge of selling off store items during the liquidation.

Culhane said:

• Hilco and other partners were hired to run the store liquidations

• These partners controlled the prices and timing of all sales

• They promised to make $17 million, but only $10.7 million was earned

• The shortfall happened because of poor planning and execution by the liquidation team

He also said Hudson’s Bay asked for more aggressive price discounts to help sell furniture and fixtures, but these were ignored.

What Is the Monitor’s Role?

A court-appointed monitor, Alvarez & Marsal, is overseeing Hudson’s Bay’s restructuring. But Restore is now asking the court to:

• Give more powers to this monitor (a “super monitor”), or

• Replace them with a new receiver (Richter Consulting), who would take over and make business decisions on behalf of the lenders

Restore says this is needed because the current management has lost credibility.

Hudson’s Bay Still Has Plans

Despite the legal fight, Hudson’s Bay says it still has ways to raise money, including:

• Finalizing the Ruby Liu lease deal

• Selling another set of leases (expected to be presented later this month)

• Hosting an auction of art and historical items

• Seeking access to surplus funds in employee pension accounts

Culhane believes these efforts will help pay back all the debts owed to lenders.

What’s Next?

The Ontario court will soon decide:

• Whether to approve Ruby Liu’s lease deal

• Whether Hudson’s Bay needs more oversight

• Whether to give more control to lenders or leave things as they are

The decision could affect the future of Hudson’s Bay’s remaining assets, the fate of its former retail locations, and whether a new brand of department stores under Ruby Liu will ever open.

For now, the legal battle continues, and all eyes are on the court’s ruling.